This book provides a wide-ranging review of the European rules relating to distribution: exclusive purchase and exclusive supply, exclusive and selective distribution, motor vehicle distribution, franchises, commercial agents.

French Distribution Law

The distributor is required to pay to the supplier for goods that have been supplied to it within the deadlines and under the conditions provided for in the contract . The non-payment of the goods supplied  results in the termination of the exclusive distribution contract . An express termination clause is as a general rule included in such contracts. However, automatic termination cannot be order …

Obligation to pay for the goods supplied.

The distributor is required to pay to the supplier for goods that have been supplied to it within the deadlines and under the conditions provided for in the contract . The non-payment of the goods supplied  results in the termination of the exclusive distribution contract . An express termination clause is as a general rule included in such contracts. However, automatic termination cannot be ordered for either a suspension of payments where it is not referred to in the termination clause  or for default of payment due to the sudden termination of a supplier-credit that has been in place for several years . The distributor cannot claim the right to withhold performance (exception d'inexécution) where the delivery delays he cites to justify a refusal to pay the balance of the price of the goods ordered are partially attributable to him and where he fails to demonstrate the existence of critical defects preventing their marketing .

The supplier may also preserve its rights by setting-off the price debt with an indemnity it owes the distributor, since these mutual debts originate in the same contract . Likewise, it may refuse to register new maintenance contracts for its products where the reseller has substantial outstanding debts, for which payment has been previously requested and which are not disputed .

Lastly, to protect themselves against outstanding payments, manufacturers can propose amendments to exclusive distribution contracts with their distributors in financial difficulties in order to make supplies under deposit contracts. Pursuant to this practice, which is common in the automotive sector, the distributor cannot supply the motor vehicle to the consumer without having paid the price thereof to the manufacturer and the latter keeps the registration documents as guarantee. The breach of that obligation may be penalized on two different bases: at the civil level, the supplier may implement the termination clause that refers to default of payments ; at the criminal level, it may bring proceedings for breach of trust . However, the success of an action for breach of trust means that a good which has been handed over subject to a condition of return, has been misappropriated . However, the fluctuating character of case law is harmful to the development of a contractual tool useful for distributors. Thus, an initial decision of the Criminal Chamber of the Court of Cassation ruled there was a breach of trust insofar as the distributor had misappropriated motor vehicles , whereas, by contrast, in another case it excluded it on the ground that the distributor had not accepted the supplier's unilateral decision to re-characterize the sale into a consignment contract .

CA Rouen, 1 March 1984; CA Paris, 9 February 1988.

Cass. com., 19 December 1995, LawLex200200005519JBJ: the termination of the contract is justified where the dealer suspends its payments for supplied already made; 26 January 1999, LawLex200200005175JBJ.

Cass. crim., 24 May 2000, LawLex200200005002JBJ: a dealer is guilty of breach of trust when it misappropriates the motor vehicles which were originally sold to it then only left in deposit as contractual penalty.

Cass. crim., 30 October 2001, LawLex200200005007JBJ, holding admissible the appeal against CA Lyon, 3 October 2000, LawLex200200005006JBJ.

Cass. com., 25 June 1991, LawLex200200005850JBJ: clause referring to the case of the issuance by the dealer of a payment means that it cannot honor whereas, in this case, the distributor had decided to suspend its payments without issuing any title.

CA Paris, 12 September 1988, LawLex200200005729JBJ.

CA Lyon, 15 December 2016, LawLex201700000024JBJ.

Cass. com., 19 December 1989, LawLex200200005764JBJ.

CA Paris, 25 June 2021, LawLex202100004094JBJ.

Cass. com., 19 March 2002, LawLex200200004695JBJ: the implementation of a termination clause some days after the statement of suspension of payments by a distributor is not unlawful where it is not based on the latter's financial difficulties, of which the supplier was not aware, but penalizes the non-payment of vehicles.

CA Lyon, 3 October 2000, LawLex200200005006JBJ: a dealer who, before payment to the manufacturer, resells motor vehicles, does not commit a breach of trust where the parties' relationship is assimilated to a sale and not to a consignment. Compare with CA Versailles, 10 June 1999, LawLex200200005001JBJ: a dealer is guilty of breach of trust when it misappropriates the motor vehicles which were originally sold to it, then simply left in deposit as contractual penalty; CA Aix-en-Provence, 25 November 1999, LawLex200200004742JBJ: a dealer who sells the motor vehicles handed over to it by the manufacturer only as deposit commits a breach of trust.

French Distribution Law

97. Obligation to pay for the goods supplied.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

97. Obligation to pay for the goods supplied.

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise